This story is part of the second year of a MarketWatch series, “Gifts that pay off.” Between now and Dec. 25, we will look at gifts that could potentially earn the recipients money or improve their lives.

Americans are expected to shell out an average of $1,536 on holiday shopping this year, up from $1,226 in 2017, according to financial services firm Deloitte’s 2018 holiday spending survey. “Our 33rd annual holiday retail survey findings corroborate this forecast — consumers seem bullish about the economy, their household financial situation, and their spending plans for the coming holiday season,” the report said. “Additionally, our consumer survey shows online spending continues to grow and is expected to account for 57% of all purchases.”

But much of the spending is for naught: Roughly $1 billion in gift cards go unspent. And that doesn’t take into account the money spent on all those unwanted gifts.

Our 2017 holiday gift guide features gifts that pay off. And not just stocks or ETFs, but gifts that help your family, friends and children be happier, get smarter, save time, and bring new opportunities.

MarketWatch is here to help. The second year of our holiday gift guide features gifts that pay off — presents that may actually be good investments for those receiving them. And by “investments,” we don’t mean just stocks or ETFs, but gifts that will help your family, friends and children be happier, get smarter and save time, or create new opportunities.

Luckily, the academy has been hard at work studying why we sometimes fail at gift giving and how we can do better. “If we can understand why people are making these errors, we can help consumers make their dollar go farther when they’re gift giving,” said Julian Givi, a marketing Ph.D. student at Carnegie Mellon University who co-authored a 2016 paper on common gift-giving errors.

Ahead of our new holiday gift guide, here are some of the big take-aways on how to approach this most socially treacherous season:

It’s the thought that counts — or is it? It’s better to ask ...

Forget the personality analysis and the clue dropping. When people ask for something specific, get it for them. Failing that, just ask. Givers sometimes disregard recipients’ stated gift requests because they think it’s more thoughtful to go out and find a more surprising present. But recipients generally prefer the requested gifts, according to researchers at Harvard and Stanford.

The alternative is far worse than asking. People tend to give their fathers neckties, tools and electronics, while they give their moms jewelry, clothes and perfume, experts say. With the MarketWatch guide to Gifts That Pay Off, it may be eminently possible to avoid both. Robert Passikoff, founder and president of Brand Keys, said it’s best to avoid both. “There’s so much more to buy for a mother than a father,” he told MarketWatch.

Go ahead and be mushy: Sentimental gifts are a better bet than we think

Want a gift that someone will really appreciate over the long haul? Listen to your heart, not your head. “People often offer things with superficial attributes that the recipient is known to like,” Givi said. “I have a brother who likes Nike
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so I’ll often give him Nike products because I’m certain they’ll be well-liked. But in reality what recipients actually want are things that are more sentimental.”

People get used to shiny new objects such as Apple’s
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iPad, but the pleasure they feel about the item diminishes over time — a concept known as “hedonic adaptation.” Sentimental gifts that remind the recipient of a special person or time in their life don’t lose their luster to the same extent, Givi said. “Over time, you stay happy with them,” he said. Givers may be less inclined to give sentimental gifts because they consider them risky in comparison with more traditional presents that the recipient has previously liked, but it’s a leap worth taking, Givi said.

Gift givers want smiles, but recipients want usefulness

Gift givers tend to focus too much on the moment of the gift exchange and the reaction their gift will get. Hoping to get a “Wow!” and a smile from the recipient, givers choose gifts that will dazzle in the span of those few seconds when the recipient is unwrapping them. But recipients tend to prefer gifts that will be useful to them over the long term. That’s why over the next month we’ll be recommending gifts that can be useful to the recipients in myriad ways for months or even years.

Note of caution: It’s easy to overdo the usefulness. Once upon a time, Mark LoCastro, acount director at Affect Inc., a public relations and social media firm based in New York, bought his mother a cooking apron and pot holders. Her reaction? “She hated it,” he says. “I will never make that mistake again.” He is acutely aware of why his mother was unhappy. “Household equipment will give your mother the impression that you think she’s a personal housekeeper.”

Socially responsible gifts don’t go over as well as we think

People tend to misjudge how much someone will like a socially responsible gift such as a charitable donation, especially when it comes to friends or family members whom they don’t know very well, according to 2015 study. Givers pick these presents because they think the recipient will see the gift as a symbol of the giver’s commitment to the relationship, particularly if the recipient is a distant friend. “However, socially responsible gifts provide the recipient with little ownership value, and thus recipients are less enthusiastic about them than traditional gifts,” Givi and his co-authors wrote.

Leslie
Albrecht

Leslie Albrecht is a personal finance reporter based in New York. She worked previously as a local news reporter at the New York City neighborhood news website DNAinfo, and as a reporter at the Modesto Bee and Merced Sun-Star, two McClatchy newspapers in California's Central Valley. She is a graduate of the Columbia University Graduate School of Journalism. Follow her on Twitter @ReporterLeslie.

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